Business Irish

Friday 23 February 2018

More than 10 potential suitors swarming for AIB's Polish unit

Advisers will have to weed out 'tyre-kickers' from serious buyers

AIB chief executive Colm Doherty, acting finance director Maeliosa O'hOgartaigh, and chairman Dan O'Connor arrive at Treasury Buildings yesterday
AIB chief executive Colm Doherty, acting finance director Maeliosa O'hOgartaigh, and chairman Dan O'Connor arrive at Treasury Buildings yesterday

Joe Brennan

Allied Irish Banks' Polish unit, put up for sale two weeks ago, has enticed initial interest from at least 10 potential suitors, including two French and two Spanish banking giants and lenders from Scandinavia and Austria.

Sources in London and Warsaw suggest up to 12 financial groups are running the rule over AIB's 70.2pc-owned Bank Zachodni WBK, and that bidding could reach as much as a 20pc premium to current share prices.

This would generate €2.9bn for AIB as it races to raise €7.4bn of capital by the end of this year.

Zachodni's stock has soared almost 14pc over the past two weeks to a two-year high.

Acquisitive Spanish banks Santander and BBVA, as well as Paris-listed Societe Generale and BNP Paribas, are understood to be circling Zachodni.

Nordic financial services group Nordea is also known to be among early runners and riders. Dutch financial group ING's Polish arm Bank Slaski is said to have expressed an interest in AIB's unit.

Austria's Raiffeisen International is reported to be looking at the business. Italian banking powerhouse Unicredito is also expected to have a look at the asset, but is likely to run into major competition issues, through its control of Poland's second-largest bank, Pekao.

Similarly, PKO Bank Polski, effectively state-controlled through direct and indirect stakes, would encounter competition problems, although one source said this was unlikely to stop it expressing an initial interest.

Morgan Stanley and AIB Corporate Finance, who are handling the sale, have not yet set first-round bid deadlines. They face a tough task separating 'tyre-kickers' from more seriously interested parties, before a data room is set up for would-be bidders to pour over Zachodni's books.


"It's one of the most interesting transactions on the market, because the bank itself is very profitable and one of the best-managed banks in Poland -- making it a rarity," said Marcin Materna, an analyst with Millennium DM in Warsaw.

Zachodni has 512 branches and is a strong player in mutual funds and broking.

Mr Materna said the bank would likely fetch a maximum of three times its book value. This points to a price of 250 zloty (€64.8) a share, up 14pc from where it is trading and 29pc from just before a 'for sale' sign was hoisted over the bank.

While there had been concerns AIB would be seen as a distressed seller, a Polish broker, who declined to be named, said: "That's not going to take away from them (AIB) getting a very good price. It's a quite valuable asset, which would add to the buyer's earnings from day one."

Davy analyst Emer Lang has pencilled in the shares achieving 260 zloty. This would result in a €2.2bn capital gain and a €700m capital benefit from the reduction of AIB's risk-weighted assets.

In an upbeat client note issued on Irish banks yesterday, investment bank Goldman Sachs said it expected AIB to generate €2.7bn from the Zachodni sale.

Goldman sees the bank bringing in a further €1.8bn by selling its 23pc holding in US regional lender M&T and its UK division.

This leaves a €2.9bn hole that needs to be filled through share sales later in the year and a likely conversion of at least part of the State's €3.5bn indirect stake in AIB into ordinary shares.

Goldman sees AIB having to issue €280m in shares in respect to an interest payment due on the State's preference shares in May. The broker sees AIB posting normalised net profits of about €950m from 2013, after the worst years of bad loan losses have passed.

Irish Independent

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